New Changes in TDS Form 24Q for Salaried Employees

Employers are required by law to take into account the TDS/TCS withheld from non-salary income when computing TDS on salaries as of October 1, 2024. By making sure that the tax submitted previously on non-salaried income is taken into account, this adjustment aims to reduce the additional TDS deductions that salaried employees frequently have to deal with. It required some time to construct the substantial technical infrastructure once this law change was introduced in 2024.

According to NSDL e-Governance, these modifications were incorporated into the TDS software on December 27, 2024, guaranteeing accurate TDS certificates starting in Q4 of FY 2024–2025. For the rest of FY 2024–2025, it guarantees that the employees will benefit from accurate TDS calculations and certificates. The main changes to TDS Return Form 24Q for all salaried individuals are covered in this article.

Adjustment for TDS/TCS on Non-Salary Income

Employers now include the tax that has already been collected or deducted from non-salary revenue in the TDS calculation for salaries. The precise modifications have made sure that employees are not subject to excessive deductions or double taxation. For instance, if a salaried individual receives additional freelancing income from which TDS has previously been deducted, the employer will make the necessary adjustments when calculating the pay TDS, which will reduce the TDS burden.

Enhanced Reporting on Form 24Q

To ensure a thorough breakdown of all taxes withheld from income, a new column has been added to report TDS/TCS deducted by other deductors or collectors under 192(2B).

Along with the total taxable pay, the very column has been renamed and renumbered to reflect TDS withheld from income by other employers. These improvements will make it easier for firms to comply with regulations and clear things up for tax officials.

Workers who have opted for the new tax regime benefit from a higher standard deduction of ₹75,000, up from ₹50,000. Employers must ensure that the deduction application is compelling and update the payroll systems to reflect the same adjustment.

To claim the lower TDS deductions and any other deductions or exemptions under the new tax scheme, employees must submit Form 12BAA to their employers. This guarantees that employers can modify TDS deductions under the October 15, 2024, Notification No. 112/2024-Income Tax.

In December 2024, Protean’s upgraded File Validation Utility (FVU) version 8.9 and Return Preparation Utility (RPU) version 5.4 went live. These tools will help employers file accurate TDS returns that include the most recent Form 24Q provisions.

The issued TDS certificates will display the revised modification in the TDS calculation procedure starting in Q4 of FY 2024–2025. These certificates will give employers an accurate record of tax deductions that will be important for completing income tax returns (ITRs).

Impact on Workers and Companies

To account for any TDS or TCS withheld from non-salary revenue, employers must modify salary TDS calculations. Payroll systems should be updated to reflect the modifications to TDS computations and standard deductions. Use the new TDS program for accurate reporting and filing. Employers must attest that workers file Form 12BAA to receive the reduced TDS deduction under the new tax law.

To Workers, Employees benefit from the revised TDS framework since it reduces over-deduction and increases take-home pay. TDS modifications for non-salary income guarantee correct taxation and improve cash flow.

Conclusion:

The minor TDS modifications effective January 2025 represent a significant step towards increasing the accuracy and effectiveness of tax deductions for salaried workers. By including the TDS/TCS on non-salary income, these revisions simplify the tax deduction technique, reducing the financial burden on employees and helping to increase their take-home pay, which in turn improves their spending capacity.

To properly file their TDS returns, employers must adopt new software and tools, and employees must continue to be proactive in informing their employers of any additional income and submitting Form 12BAA for reduced TDS deductions. Employers and employees can effectively manage the new TDS framework, guaranteeing compliance and optimising tax efficiency, by understanding and adjusting to these improvements.